Affordable Payment Options: HSA vs FSA

November 7, 2017

A hand holding a credit card
Are you thinking about getting braces for you or your kids but don’t know if you can afford it? You might be wondering if the investment in orthodontic treatment is really worth the cost. What if there was a way to pay for braces without going into debt? With a Health Savings Account (HSA) or a Flexible Spending Account (FSA), you can afford to get you or your kids braces, no debt required. Once you get the account started, Smile Ranch makes paying for your braces easy. If you’re thinking of opening an HSA or FSA, here’s what you should know about these two options.

What are HSAs and FSAs?

Both the Health Savings Account (HSA) and the Flexible Spending Account (FSA) are pre-taxed savings that are taken directly out of your paycheck. While these two accounts work differently, both can be used to pay for medical bills, including orthodontic treatment. Here are a few key points about both HSAs and FSAs:

The Money Comes From Your Paycheck Before Taxes

This means that you end up saving money on taxes with both kinds of accounts. Think of it this way: if you earned a gross annual income of $50,000 and payed 20% in taxes (to make the numbers easy to calculate), you would be paying $10,000 in taxes. Now, imagine you opened an FSA or HSA and are saving $1,000 that year in one of those two accounts. Your new gross annual income before taxes would now be $49,000. If you’re still paying 20% in taxes, your new tax amount would only be $9,800, which is $200 less. Keep in mind that you never lost the $1,000 when you opened your FSA or HSA. That money is still yours.

They are not Considered Loans

HSAs and FSAs are not loans. Instead, they are savings that come directly from your paycheck to help you cover medical expenses. You have to pay back the money you’re given up-front if you choose to open an FSA, but that money is taken directly from your paycheck, with no interest or hidden fees.

They can be Used to pay for Medical Treatment

The entire purpose of HSAs and FSAs is to help you pay for medical expenses. Orthodontia is considered a medical expense, even if it isn’t covered by your insurance policy. If you want to know what you can use your HSA or FSA for, here’s a list of what’s considered medical treatment. It’s important to note that both HSAs and FSAs can be spent for your child’s orthodontic treatment, not just your own.

Health Savings Account

The easiest way to explain how a Health Savings Account (HSA) works is exactly as the name states: it’s a savings account. When you set up an HSA, you work directly with your bank and choose an amount that is taken directly out of your paycheck each month. However, to enroll in an HSA, you MUST be enrolled in a High Deductible Health Plan with a deductible of at least $1,350 for individuals or at least $2,700 per year for a family plan. The funds you put in your HSA can roll over from year to year, and depending on the bank, may accumulate interest. Key advantages of an HSA are:

  • The amount pulled from your paycheck is before taxes, which saves you money.
  • You can change the monthly amount you choose to save at any time during the year.
  • The amount you save rolls over from year to year.

Flexible Spending Account

A Flexible Spending Account (FSA), also sometimes called a Flex Spending Account, works like a credit card. If you choose to go for an FSA, you are given the money you choose to take out of your paycheck upfront. It’s important to note that unlike an HSA, you can’t change the amount of money you’ve received during the year, and you can’t take out more money even if you find you need it. To pay back the money, the amount you took out is divided by 12, and that amount is taken from your paycheck each month. For example, if you chose to take out $1,200 for your FSA, you would then have $100 taken out of your paycheck each month to pay back that money. This number adjusts according to how many paychecks you get per month. If you are paid twice a month, only $50 would be taken out each paycheck. Here are a few key points to remember if you choose to go with an FSA:

  • FSA money is pulled before taxes are calculated, meaning you save money on your taxes.
  • You are given the money up-front, but it isn’t considered a loan. A set amount is taken from your paycheck each month to pay the money back.
  • The money you receive is “use it or lose it.” It does not roll over every year, but there may be a $500 rollover depending on your employer’s policy.

Which Option is Right for You?

You must have a High Deductible Health Plan if you want to open an HSA, but if you have the choice between the two types of accounts, it’s important to consider the advantages and disadvantages of each. If you need the money right away, the FSA can make sure that you’re covered. However, if you just need extra money to save for a later day, an HSA is a great savings investment, and you still keep your HSA even if you switch jobs.

Does Smile Ranch Accept Payments From an HSA or FSA?

YES! We accept both! If you’re thinking about using an HSA or FSA to pay for orthodontic treatment, Smile Ranch is happy to work with you! Both HSAs and FSAs provide cards that look like debit or credit cards, and we can keep that number on file to make the payment process less of a hassle. We can even schedule automatic payments, so you never have to worry about missing a payment ever again. Other orthodontists may require you to call and provide a card number every time you need to make a payment, but not us. We strive to make paying for braces as easy as possible.

Still not Sure if you can Afford the Cost?

We understand that getting braces or other orthodontic treatments is a big cost commitment, which is why we offer a free consultation! We work directly with you to let you know how much your treatment will cost, which treatment is best for you, and how we can help you get a “Smile Ranch Smile!” This consultation is completely free, no commitment required.

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